Investors in a bind as banks pull the plug on bitcoin accounts

MUMBAI: The uncertainty over regulating crypto-currencies seems to have left hundreds of Indian investors in the lurch.

A number of retail investors who had bought bitcoins over the past few months are now stuck as some banks are not allowing them to deposit money earned from trading on bitcoin exchange platforms.

Passing the buck

These investors told BusinessLine that they are unable to either trade on some of the bitcoin exchanges or withdraw the invested amount into their linked bank accounts. The investors are also finding it tough to file a complaint in this regard as both the banks and the bitcoin exchanges are passing the buck to each other.

Vandana Tiwari, an investor from Varanasi, said she had been investing on a leading bitcoin exchange for several months through her bank account.

But recently, when she tried to invest about ₹20,000 from her bank account, the amount did not reflect on her bitcoin account although the transaction status clearly mentioned that the amount had been credited via NEFT.

“I had written to the exchange but they said that they have not received the money while my bank statement shows that the money was credited. Now, I don’t know whom to approach. Banks are also not giving any clarification,” she said. BusinessLine has an email copy of the transaction details.

Another customer from Delhi, who did not wish to be named, said that he is unable to withdraw his balance from his bitcoin account, which is asking him to verify his bank account.

S Siddharth, a software engineer in Hyderabad, said his bitcoin investments, worth ₹40,000, are stuck as his bank was asking him to verify his account even though he had completed all KYC requirements.

To verify the claims, this reporter also invested ₹2,000 to buy bitcoin. The invested amount could not be withdrawn into the bank account a few days later.

BusinessLine contacted over a dozen banks, including ICICI, HDFC, YES Bank, Bank of Baroda and Kotak Bank, to know if they had officially blocked transactions related to bitcoin trading or if the complaints were limited to some specific accounts.

However, none of the banks offered any comments.

Sources within the banking industry said they have been asked not to make any comments on crypto-currencies since the Reserve Bank of India (RBI) has not come out with clarifications on their legality. Although there is no official ban, the RBI has issued multiple warnings to caution against trading in virtual currencies.

Questions mailed to Zebpay and other exchanges, including Bitcoin India, remain unanswered.

However, Sathvik Vishwanath, founder of Unocoin, said his exchange has not witnessed any issues regarding deposits or withdrawals. He said Unocoin has partnered with over half a dozen banks but refused to name them.

Jabeer KM, Chief Operating Officer of Belfrics India, an arm of Singapore-based exchange Belfrics, said that the platform stopped taking fresh deposits a few weeks ago and is awaiting further clarity from regulators.

In a statement, Blockchain and Cryptocurrency Committee of India, the newly formed industry body representing crypto-currency exchanges, said: “The recent knee-jerk actions by a few banks in terms of closing bank accounts of some cryptocurrency exchanges have led to hardship to these citizens.”

The industry body will soon be holding talks with the banks to help them understand this emerging sector and recognise the harmful effects of their knee-jerk reactions, it added.